NVIDIA plunges due to Jensen Huang scandal... Are domestic ETF stock prices also affected?

After a weak close the previous day, U.S. AI-related stocks rebounded overnight on the overall upward trend.

“Despite privacy controversy, semiconductor stocks are being bought at low prices… AI security issues are likely to spread.”

(Seoul = Yonhap News) Reporter Go Eun-ji = On the 9th, when the affair scandal of Nvidia CEO Jensen Hwang (CED) became known, Nvidia-related exchange-traded funds (ETFs) listed in Korea fell all at once, but are showing an upward trend again on this day.

According to the Korea Exchange on the 10th, among domestically listed ETFs, there are a total of 7 products with NVIDIA in the name. These ETFs all closed weakly the previous day.

The ETF with the biggest drop was '1Q NVIDIA Alphabet US Bond Mix 50', which fell 1.98% from 8,825 won on the 6th to 8,650 won on the 9th. The ETF contains Nvidia, Alphabet, and the U.S. short-term government bond ETF.

Next, 'RISE NVIDIA Fixed Tech 100' (-1.93%), 'KIWOOM NVIDIA US 30-Year Treasury Bond Mix Active (H)' (-1.62%), 'ACE NVIDIA Bond Mix' (-1.37%), and 'TIGER NVIDIA US Bond Call Balance (Synthetic)' (-1.02%) had the highest decline rate in that order.

Nvidia's board of directors issued an official statement on the 8th (local time) and announced, "We have launched an independent investigation regarding recent reports that founder and CEO Jensen Huang was targeted by a foreign intelligence agency." CEO Hwang also acknowledged the affair in a separate message.

Nvidia's stock price plummeted due to CEO Hwang's scandal.

Nvidia's stock price fell 4.2% on the night of the 8th (local time) on Robinhood, an American online stock trading platform.

Then, on the 9th (local time), the major stock indices of the New York stock market all soared, but only NVIDIA fell to $170.24 at one point during the session, reaching a decline rate of 8.79% compared to the previous session. The closing price was $178.67, down 4.3%.

However, Nvidia-related ETFs listed domestically showed a rebound on the 10th.

As of 10:26 am on this day, ‘1Q NVIDIA Fixed US AI Semiconductor’ is trading at 8,895 won, up 5.14%. ‘ACE NVIDIA Value Chain Active’ is also rising by 5.81%.

Although these ETFs include NVIDIA as a major component, they are interpreted to have done well because they also include other major U.S. semiconductor stocks such as Micron and Broadcom or bonds.

It is affected more by semiconductor stock prices and U.S. bond prices than by Nvidia stock prices.

Like ACE NVIDIA Value Chain Active, the name of the ETF includes NVIDIA, but the actual constituents may consist only of NVIDIA's value chain stocks such as Samsung Electronics and Samsung Electro-Mechanics.

Although the securities market believes that CEO Hwang's scandal had a limited impact on semiconductor stocks for now, they are keeping an eye on how the situation will develop in the future.

Jaewon Lee, a researcher at Yuanta Securities, said, “The leading artificial intelligence (AI) stocks were pushed out due to the Nvidia CEO scandal and board investigation, but the buying trend spread to AMD, Broadcom, and semiconductor equipment stocks, and the four major U.S. stock indexes rebounded by more than 2%.” He added, “The base of the rally has also expanded with the addition of small and medium-sized stocks.”

Park So-yeon, a researcher at Shinyoung Securities, said, "Despite the controversy over the private life of Nvidia's CEO, there was an influx of low-priced buying centered on semiconductor stocks, and the decline in international oil prices further improved investor sentiment."

Jiyoung Han, a researcher at Kiwoom Securities, pointed out, “There is a possibility that this could spread to an AI-related national security issue rather than an issue related to the CEO’s privacy,” adding, “The issue could spread due to uncertainty in Nvidia’s governance structure and strengthening of export controls on technology to the public.”